New Telegraph

Value of Nigerian tractor deficit hits N1.3trn

  • Lack of funds stalls Nigeria, Brazil pact

SHORTAGE

Supply of tractors in the country is below demand

 

Two years after, moves by the Federal Government to bridge the 31,000 tractors deficit valued at N1.37 trillion have not yielded the expected result as tractor assembly and supply programmes from Brazil have not fully taken off due to lack of funds. The country is currently facing long standing agricultural mechanisation problem.

 

The Development Bank of Brazil and the Federal Government had signed a Memorandum of Understanding (MoU) to fund the project with a loan of $1.2 billion over a period of 15 years in order to make 10,000 tractors available to Nigerian farmers.

 

It was learnt that average farm tractor costs $78,062 in the global market, while farm implements market are expected to grow steadily and maintain a year-overyear increase of 4.4 per cent during 2019-2024.

 

However in Nigeria, high tariffs are charged by Nigeria Customs Service (NCS) on imported tractor parts, while used tractors are surcharged 35 per cent import duty and 7.5 per cent valued added tax. Fully built agricultural equipment importation is duty-free.

 

According to a recent report by World Bank, there are less than 50,000 tractors in the country, far short of the estimated 81,000 tractors that were needed to satisfy farmers demand. It revealed that only 1,000 tractors are imported into the country yearly, while 500 of the imports are not used for mechanise farming.

 

The report explained: “The total annual demand for tractors in Nigeria is about 81,000, including about 1,000 imported tractors. In order to attain the mechanisation level recommended by the United Nations Food and Agriculture Organisation (FAO), about 100,000 tractors are needed annually.

 

“Nigeria would have to increase the number of tractors by about 25 times to a projected number of 1.13 million tractors in line with the estimates given by the National Policy of Agriculture and Mechanisation development.

 

The World Bank report also noted that several factors had been linked to the high rate of tractors breakdowns in the country, saying that poor management    systems, inadequate knowledge of tractor ownership costs and lack of funds to enable prompt repairs and maintenance services were the challenges. It stressed that the useful life of tractors varied and was largely determined by the brand, type and availability of spare parts.

 

Also, the United Nations COMTRADE database on international trade explained that in 2018, United States export of tractors to Nigeria was $3 million. In 2019, it was $4.6 million and 2020, $6.59 million. It stressed that Indian supplied $30 million tractors in 2018, $9 million, 2019 and $10.17million, 2020.

 

Other tractor exporters to the country in 2020 are China with a share of $45 million; Germany, $39 million; Brazil, $18.9 million; United Kingdom, $6.13 million; Korea, $5.19 million; Pakistan, $2.21 million; Turkey, $1.18 million and Netherlands, $1.08 million.

 

Worried by the deficit, the Minister of Agriculture and Rural Development, Mohammed Abubakar explained that government was planning to assemble 50,000 units of assorted implements and equipment in the country to boost agriculture.

 

It would be recalled that in January 2019, the Federal Government launched its Green Imperative Programme in partnership with the More Food International Programme of the Brazilian Government to support small farmers with mechanisation.

 

Despite the MoU, the company has not delivered the tractors because of fund. Meanwhile, International Trade Administration (ITA) report, also revealed agricultural tractors imported as Complete Knock Down (CKD) or Semi-Knock Down (SKD) units for local assembly attract zero duties and zero Value-Added Tax (VAT) as part of efforts to speed up its mechanisation programme in the agriculture sector.

 

The Federal Government had also assured that it would receive the first batch of tractors out of the 10,000 tractors expected from Brazil under the Green Imperative Project, noting that the Green Imperative programme, which would address the long standing agricultural mechanisation problem, was underway.

 

The minister explained that the programme would ensure adequate supply of tractors and other implements to farmers on a publicprivate partnership arrangement. He added that the model adopted was sustainable and would ameliorate the low production challenge due to lack of sufficient machinery

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